Report on remuneration policy and compensation paid

On 23 February 2021, the Board of Directors of Iren S.p.A., upon the proposal of the Company's Remuneration and Appointments Committee, approved the Guidelines on the Remuneration Policy for Directors, including executive/with special offices, and Statutory Auditors of Iren as well as top management/Senior Executives with Strategic Responsibilities of the IREN Group for 2021 (hereinafter "2021 Guidelines"), consistent with the recommendations of the current Corporate Governance Code.

Objectives and general principles of the Remuneration Policy

Remuneration policies, defined in compliance with the Company’s governance model, as well as with the recommendations contained in art. 5 of the Corporate Governance Code, pursue the general goal of attracting, retaining and motivating individuals useful for the development of the Group, rewarding the results obtained.

 

These policies serve to align the interests of management with respect to the objective of guaranteeing the sustainable success of the Company, by means of an increase in value for Shareholders over the medium/long-term, making it possible to achieve stable and sustainable results over the short and long-term, in line with the Business Plan, ensuring adequate retention of those in strategic positions for governance and business and, more generally, promoting the company's mission and values, with particular attention to sustainability.

 

In terms of remuneration policies, the short-term incentive system for the Iren S.p.A. Chief Executive Officer and General Manager and the Iren Group Senior Executives with Strategic Responsibilities represents a tool intended to differentiate excellent performance without any form of automatic recognition and not linked to the achievement of assigned objectives and, in each case, pursues the goal of:

 

  • allowing performance to be assessed on quantitative and qualitative variables with a direct link to the Company's performance, as well as to its strategic objectives and sustainable success, in line with the Company's risk management policy;
  • guaranteeing that the variable component, with respect to the fixed component, creates an incentive and is significant;
  • avoiding the creation of excessively complex mechanisms, difficult to communicate and manage;
  • selectively guiding individual performance, while also guaranteeing the achievement of Group and company goals.

 

The long-term variable component - also confirmed for 2019-2021 for the Iren S.p.A. Chief Executive Officer and General Manager and the Iren Group Senior Executives with Strategic Responsibilities - has the objectives of:

 

  • stimulating the ability to create value for the Group, rewarding the achievement of industrial, strategic and business objectives;
  • guaranteeing the achievement of economic-financial objectives in the context of medium/long-term sustainability;
  • strengthening the motivation of the relative beneficiaries in pursuing the strategic objectives set out in the Business Plan, aligning their interests with those of stakeholders;
  • attracting and motivating resources by rewarding achievement and performance culture;
  • developing and strengthening retention policies for key company resources, making it possible to increase their sense of belonging and create incentives for them to remain with the Iren Group;
  • ensuring that the pay-mix (relative weights of fixed remuneration, short-term and long-term variable remuneration) is in line with market practices, without prejudice to the principle of sobriety which characterises the Company.

 

With regard to the non-executive Directors and the members of the Board of Statutory Auditors, the objective of the policies is to make available to the Shareholders all the elements that enable them to adopt the measures that pertain to them, by defining, in the appropriate venues, remuneration that is appropriate to the competence, professionalism and commitment required by the tasks assigned to them, as well as to the size and sector characteristics of the Company and its situation.

 

Also for 2021, the Principles adopted by the Shareholders' Meeting of 22 May 2019, already in force in the previous Board term and inspired by a logic of compensation containment, were taken into account:

 

  • principle of the all-inclusive nature of the remuneration received for the employment relationship and obligation to repay it, which applies to all managers/employees of Group companies, on the basis of which all corporate positions held within Group companies/entities must be held without any additional remuneration, since they are part of the duties; 
  • principle of the use of the Directors of the Parent Company IREN Board of Directors and employees prevailing in the administrative bodies of the companies directly and indirectly controlled by IREN.

 

The same Shareholders' Meeting also established the maximum ceiling for overall compensation paid to Directors with special offices, pursuant to the Articles of Association for the three year period 2019-2021 (Chair, Deputy Chair and the Chief Executive Officer, taking into account the above principles). These limits guided the preparation of the Remuneration Policy since the establishment of the body.

The principles adopted by the Shareholders' Meeting were applied, to the extent compatible, also when the delegated bodies determined the remuneration for Iren Group Senior Executives with Strategic Responsibilities, as established in the Corporate Governance Code.

Correlation between strategy, sustainability, and remuneration policies

The growth strategy of the new Business Plan launched by Iren in 2020 is consistent with the main trends already identified in previous business plans and confirmed in the current one, with the goal of becoming a leading operator in sustainability through the development of the "multicircle economy." 

 

In this context, the Iren remuneration policy is a fundamentally important element in ensuring the pursuit of the strategic objectives of business sustainability and guarantee an increase in Shareholder value in the medium to long term, in line with the 2020-2025 Business Plan.

 

The Report on Remuneration Policy 2021 and Compensation Paid 2020, approved on 07 April 2021 by the Board of Directors of IREN S.p.A. at the proposal of the Remuneration and Appointments Committee, was established in compliance with and application of current legal and regulatory requirements.

Report on remuneration policy 2021 and compensation paid 2020

Compensation due for 2020

Executive summary

 

Fixed remuneration

Purpose and characteristics:

Reflects technical, professional and managerial skills

 

Criteria and parameters:

The definition of pay positioning evaluates both the development 

of the organisation and the market benchmarks

 

Recipients/Gross annual amounts: 

IREN Chief Executive Officer/General Manager 329,000 Euro, of which:

- 272,000 Euro Gross Annual Remuneration

- 57,000 Euro for the position of Chief Executive Officer

IREN Group Senior Executives with Strategic Responsibilities Remuneration determined according to the complexity and responsibilities of the role performed

2021 Short-Term Incentive Plan

Purpose and characteristics: 

- Recognise and reward the achievement of annual objectives assigned

- Focus performance on achieving company objectives

(Plan subject to malus and clawback clauses)

 

Criteria and parameters: 

Gate: maintain Investment Grade status

2021 Objectives

IREN Chief Executive Officer/General Manager

1. Group IFL Rating/FFO (weight: 25%)

2. Group IFN/EBITDA (weight: 25%)

3. Group strategic projects (weight: 30%)

4. Relationship with stakeholders, sustainability, environmental issues, governance (ESG) (weight: 20%)

IREN Group Senior Executives with Strategic Responsibilities

1. Economic-financial objectives (weight: 45%)

2. Group strategic projects or connected to individual Business Units (weight: 20%)

3. Relationship with stakeholders, sustainability, environmental issues, governance (ESG) (weight: 20%)

Assessment of Objectives

- Average achievement threshold for objectives: >=70% of the individual form

- Minimum threshold for individual objective: 60% (target=100%)

- Corrective factor: 

multiplier/demultiplier of individual results

 

Recipients/Gross annual amounts: 

IREN Chief Executive Officer/General Manager

35% of the Gross Annual Remuneration (target value)

IREN Group Senior Executives with Strategic Responsibilities

37.1% of the Gross Annual Remuneration (average target value)

2019-2021 Long Term Incentive Plan

Purpose and characteristics: 

Promote the creation of Shareholder value, with a view to long-term sustainability

(Plan subject to malus and clawback clauses)

 

Criteria and parameters: 

Gate: maintain Investment Grade status

Objectives

1. Cumulative EBITDA 2019-2021 (weight: 50%)

2. Cumulative Operating Cash Flow Levered 2019-2021 (weight: 30%)

3. Cumulative Investments 2019-2021 (weight: 20%)

Assessment of Objectives

- Minimum threshold for individual objective: 90% (defined target)

- Compensation mechanism: max 20%

- Sustainability correction: max impact 10% of bonus possible

- Closed plan with three year vesting and 6 month deferral

 

Recipients/Gross annual amounts: 

IREN Chief Executive Officer/General Manager

105% of Gross Annual Remuneration (target value over the three-year period)

IREN Group Senior Executives with Strategic Responsibilities

75% of Gross Annual Remuneration (target value over the three-year period)

Non-monetary benefits

Purpose and characteristics: 

Promote the retention of management resources

 

Criteria and parameters: 

Benefits mainly of an insurance and social security nature, defined through the national collective labour contract and reference company policies

 

Recipients/Gross annual amounts: 

Social security plans; Insurance and healthcare plans; Company car; Housing.

Compensation at end of term and/or relationship

Purpose and characteristics: 

Protect the interests of the Company

 

Criteria and parameters: 

Indemnity in cases of non-renewal/revocation without just cause prior to the end of the Director’s terms and/or other duties

 

Recipients/Gross annual amounts: 

IREN Chief Executive Officer/General Manager:

22 monthly payments in case of non-renewal of the position;

Specific regulations, with measures to protect the Company, in case of revocation without just cause at a time prior to the end of the duties; No agreements pursuant to art. 2125 of the Italian Civil Code signed